Philippines: Marcos sacks transport franchising agency chief amid corruption scandal
Land transport franchising chair ousted amid corruption charges as drivers' strike looms
Manila: Securing a franchise to operate a public utility vehicle (PUV), like a tourist transport vehicle, taxi, or Grab is free — save for a few hundred pesos in processing charges.
But in order for applicants to secure a precious "Certificate of Public Convenience" (CPC) from the agency tasked to regulate land transportation, the fee could skyrocket to an equivalent of $6,000 to $87,000. That amount could then line the pockets of corrupt agency officials, thus leaving the government empty-handed, a whistleblower has revealed.
The shocking revelation prompted President Ferdinand Marcos Jr. to sack Land Transportation Franchising and Regulatory Board (LTFRB) Chair Teofilo Guadiz III amid serious allegations of corruption, including charges of a "ruta (route) for sale" scheme within the agency.
Following Guadiz's suspension, Department of Transportation (DoTr) Secretary Jaime Bautista has appointed Mercy Leynes as the officer-in-charge (OIC) of the LTFRB in a written order. Now, a driver's union wants Bautista to be investigated, too.
Allegations and whistleblower
The scandal came to light when Jeffrey Tumbado, Guadiz's former executive assistant, exposed the alleged corrupt "ruta for sale" scheme, where operators were purportedly required to pay transport officials up to Php5 million ($87,971) for favourable treatment.
Tumbado, the whistleblower, and the transport group Manibela are considering filing charges against Guadiz and other implicated officials.
• In his October 11 affidavit, Tumbado also apologised to Guadiz and Bautista.
• On Thursday (October 12), the Philippines’ National Bureau of Investigation (NBI) Anti-Graft Division issued a subpoena for Tumbado, after Bautista requested the NBI to conduct its own probe on the alleged corruption within the LTFRB.
• A number of Philippine legislators, including Senators Grace Poe and Koko Pimentel, said on Thursday an investigation is warranted to get to the bottom of allegations of corruption surrounding the agency.
• "We are not taking it for granted but we won't tolerate false testimonies," Poe told local media. She also assured the Senate's protection for "legitimate whistleblowers" who will testify about anomalies in government agencies.
• Senate Minority Leader Koko Pimentel also called for a Senate probe: "If no authority would take charge then Senate should come in because of the public interest issue."
In a bizarre twist, Tumbado recanted the serious allegations he made on October 9 two days later, on October 11 (Wednesday).
Transport strike, public outcry
Manibela, a drivers' union, has earlier called for a nationwide transport strike set to kick off on October 16; they demand an end to corruption in the agency and for fair treatment of public utility vehicle drivers.
They also seek an extension of the traditional jeepney franchise deadline, which ends on December 31, 2023.
In announcing the sacking of Guadiz, the Presidential Communications Office (PCO) issued a statement emphasising President Marcos Jr.'s commitment to upholding integrity and transparency in his administration.
According to Special Order No. 2023-353, Leynes will serve from October 10, 2023, until October 9, 2024, replacing the now-suspended Guadiz, who faces accusations of accepting bribes in exchange for franchise approvals, additional routes, and special permits.
Guadiz, who assumed the role of board chief in December, vehemently denied knowledge of the corruption allegations, affirming his commitment to transparency and integrity within the agency.
Secretary Bautista, for his part, pledged to impose the harshest penalties if the evidence substantiates the claims. Now, after the sacking of Guadiz, the transport group Manibela is also demanding that Secretary Bautista should be included in the investigation on the corruption allegations.
Its authority to grant franchises is a highly-coveted position, and cases against its officials lodged with the anti-graft court are not uncommon.
On June 15, the “Sandiganbayan", the country’s anti-graft court, affirmed a graft case against former LTFRB executive director Samuel Aloysius Jardin, who was appointed by former president Rodrigo Duterte on March 20, 2018, but was sacked after serving for only a year based on the orders of then-transportation chief Arthur Tugade in 2019.
On December 22, 2020, the Ombudsman, ordered Jardin’s dismissal from his post.
LTFRB's power
In reality, an LTFRB-issued franchise comes at no cost to the applicant. By law, the only expenses involved are a processing fee and various minor charges, totaling just a few hundred pesos.
However, this franchise is free only for those who meet the eligibility criteria. This is where LTFRB’s “power” comes from — as it is the sole agency with the absolute discretion to evaluate applicants.
Aspiring Public Utility Vehicle (PUV) operators who are unwilling to undergo the rigorous screening process — often due to concerns that their vehicles might fail safety or emissions assessments — resort to the practice of acquiring the franchise documents of existing franchise holders, often through a financial transaction.
The result: any visitor to the country would invariably notice severely run-down smoke-belchers, mechanical dinosaurs, with decades-old hand-me-down engines from Japan, still highly visible on Philippine roads.
62 employees sacked
In December 2017, during a crackdown, LTFRB's former chief Martin Delgra exposed an alarming corruption scheme operating within satellite LTFRB offices, which he said was “common". Inefficiencies within the organisation also fostered mischief, he added.
Delgra dismissed 62 employees, including regional directors, lawyers and rank-and-file staff members.
His office was bombed. The improvised explosive device lobbed by unknown assailants damaged vehicles parked in the LTFRB compound, highlighting the challenges associated with purging undesirable individuals from within the organisation.
Delgra explained then that are two major forms of corruption within LTFRB: One is illegally selling a PUV franchise, and two is operating a PUV without a franchise.
In April 2019, Manolo Labor, a former aide of Delgra was charged for allegedly demanding money from applicants in exchange for issuing franchises.
The government filed charges against Labor who was accused of soliciting Php385,000 ($6,768.94) in exchange for the issuance of a certificate of public convenience (CPC). Labor was found in violation of the anti-graft law and later resigned his post.
Requirements for the issuance of a CPC:
"Per Section 16 (a), Chapter II of the Public Service Act. (C.A. No. 146, as amended), the certificate may be granted: provided that the following requirements are met:
[1] "the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized under the law of the Philippines, 60 per centum at least of the stock or paid-up capital of which belongs entirely to citizens of the Philippines";
[2] the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation and,
[3] the applicant must prove that the operation of the public service proposed and the authorisation to do business will "promote the public interest in a proper and suitable manner".
[Source: Supreme Court E-Library]
Archaic rules
These archaic rules mean that, despite the passage of the new EV law, if Tesla, BYD, MG, BMW or any foreign majority-owned company were to apply for a CPC to operate a modern, fully electric public transport fleet in the country, without a local partner, they won't get a licence anywhere in the Philippines.
Thus, any hope of replacing the greenhouse gas-emitting, smog-causing rolling dinosaurs proudly emblazoned with hand-painted LTFRB details and hotlines won't be realised any time soon.